Euro concern knocks FTSE 100
The FTSE 100 Index fell for the fourth session in a row in today as traders took little comfort from the latest eurozone recovery measures.
European Central Bank president Mario Draghi gave further details of an asset backed recovery programme announced last month, but stopped short of full-blown quantitative easing as brokers had hoped.
The FTSE 100 Index slumped 111.1 points to 6446.4 the largest fall since January, as shares in Morrisons, Tesco and Sainsbury’s fell after staging a recovery earlier in the session. The French Cac and Germany’s Dax also fell sharply.
The top flight has fallen sharply since it topped 6,900 in the session following the Scottish referendum as attention focuses on the eurozone’s economic crisis and the prospect of higher interest rates in the UK and United States.
Disappointing manufacturing figures in both countries fuelled jitters yesterday and accelerated a flight to safer haven assets such as gold.
The US dollar has strengthened as a result, with the pound slipping further to stand at 1.61 versus the greenback – similar to the level seen ahead of last month’s referendum result. Sterling was also off against the euro at 1.27.
In the supermarket sector, Sainsbury’s shares were 9.2p lower at 224.8p after diving 7% to a six-year low last night in the wake of its latest poor sales figures.
New chief executive Mike Coupe ruled out a recovery over the second half of the year and said the market has changed more rapidly in the last three to six months than he has seen during his 30 years in the industry.
Tesco continued to be hit by speculation that it will tap its banks for a new finance facility in order to withstand the current trading crisis. Its shares were 2p lower at 178.2p, while Morrisons was down 1p at 158.9p.
TUI Travel lost an initial gain seen after it said it now expects full-year underlying profits growth of at least 9% in the year to September 30, against its previous guidance of between 7% and 10%.
It posted an encouraging update on summer trading but said that sterling’s strength against the euro was likely to knock £40m from full-year results. It will also take a provision of £27m against loans made to its joint venture operation in Russia amid challenging trading conditions.
But in a bad day for top flight shares, TUI Travel was down 2.5p to 380.1p.
Outside the FTSE 100 Index, Fashion retailer Ted Baker was on the front foot as it eased fears about the impact of recent warm weather by reporting a strong performance from its autumn and winter collections at the start of its second half year.
The firm, which runs 381 stores and concessions worldwide, added that half-year profits jumped 33.8% to £15.6m. Shares rose 11p to 1873p.
The biggest risers in the FTSE 100 Index were Hargreaves Landsdown up 4p at 933p, Fresnillo up 2.5p at 749.5p and Randgold Resources up 1p at 4155p. Only three stocks rose in the top flight today.
The biggest fallers in the FTSE 100 Index were Ashtead down 47p at 977p, Sainsbury’s down 9.2p at 224.8p, BG Group down 39.5p at 1053.5p and Weir Group down 87p at 2343p.
